The COOH-terminal domains of PLC-beta isozymes contain a high proportion of Lys and Arg residues, some of which appear in clusters when the sequences of three regions (region 1, residues 911 to 928; region 2, residues 1055 to 1072; region 3, residues 1109 to 1126). The role of the COOH-terminus and the clustered basic residues in PLC-beta1 was investigated by either truncating the entire COOH-terminal domain (mutant deltaC) or replacing two or three clustered basic residues with Ile (or Met), and expressing the mutant enzymes in CV-1, Rat-2, or Swiss 3T3 cells. The deltaC mutant no longer showed the ability to be activated by Gq-alpha, to translocate to the nucleus, or to associate with the particulate fraction. Substitution of clusters of basic residues in regions 1 and 2 generally reduced the extent of activation by Gq-alpha, whereas substitution of a basic cluster in region 3 had no effect. Substitution of the cluster of Lys residues 914, 921, and 925 in region 1 had the most marked effect, reducing Gq-alpha-dependent activity to 10 percent of that of wild type. All substitution mutants, with the exception of that in which Lys residues 1056, 1063, and 1070 in region 2 were substituted with Ile, behaved like the wild-type enzyme in showing an approximately equal distribution between cytoplasm and nucleus; only 12 percent of the region 2 mutant was present in the nucleus. None of the basic clusters appeared critical for particulate association; however, replacement of each cluster reduced the amount of PLC-beta1 in the particulate fraction by some extent, suggesting that all the basic residues contribute to the association, presumably by interacting with acidic residues in the particulate fraction. Membrane localization of PLC-beta isozymes is, therefore, likely mediated by both the COOH- terminal domain and the PH domain, the latter of which is known to bind PIP-2. To investigate whether the catalytic activity of PLC-gamma1 is essential for its mitogenic activity, we prepared PLC-gamma1 with no detectable lipase activity by replacing Phe for essential His355 or His380 and microinjected into quiescent NIH 3T3 cells. A moderate induction of DNA synthesis occurred. Furthermore, the partial induction was increased to levels seen with wild-type PLC-gamma1 by coinjection of mutant PLC-gamma1 with IP-3 and DAG. These results suggest that the mitogenic activity of PLC-gamma1 does not exclusively result from the enzyme's PLC activity.